Bitcoin’s growing correlation with gold indicates that investors see it as a safe haven, according to Bank of America strategists

Bank of America analysts Alkesh Shah and Andrew Moss noted “that investors may view bitcoin as a relative safe haven as macroeconomic uncertainty continues.

Bank of America market strategists say the growing correlation between bitcoin and gold indicates that investors may view bitcoin as a relative safe haven.

Alkesh Shah and Andrew Moss, market strategists in Bank of America’s securities division, detailed this week that bitcoin and gold have been highly correlated recently. This news follows a recent report released by crypto data provider Kaiko, which indicates that bitcoin has been less volatile than the Nasdaq and S&P 500 indices. According to economists at Bank of America, the price of bitcoin, compared to other global assets, have prompted investors to think about the future of the global economy.

A decelerating positive correlation with SPX/QQQQ and a rapidly rising correlation with XAU indicate that investors may view bitcoin as a relative safe haven as macro uncertainty continues and a market bottom remains to be seen“, wrote analysts at Bank of America.

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Bitcoin's growing correlation with gold indicates that investors see it as a safe haven, according to strategists at Bank of America.
Editor’s photo credit: Bloomberg

On Monday, October 24, both bitcoin and gold prices remained in a tight range and were less volatile than the stock markets. Bitcoin is trading at just over $19K, while an ounce of gold is trading for a nominal $1,646.70 U.S. Bank of America’s Shah and Moss have been monitoring the 40-day correlation with gold, which is around 0.50 this week. The 0.50 rating is much closer and shows a stronger correlation with the precious metal than the leading crypto asset’s zero rating.

The move comes at a time of heightened macroeconomic uncertainty, and analysts have warned that rate hikes by the U.S. Federal Reserve could cause a liquidity crisis in U.S. Treasuries. Market watchers expect an aggressive rate hike next month, but strategists also believe the Fed will pivot by December. Gold and BTC have fallen significantly since the historic highs in prices for both assets. Gold, for example, hit an all-time high against the U.S. dollar on March 8, 2022, when it reached $2,074 per ounce.

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Gold has lost 20.49% against the U.S. dollar since the all-time high 230 days ago. The crypto asset bitcoin (BTC) has lost 72% against the greenback over the past year, after touching $69,044 per unit on November 10, 2021. Gold now has a global market capitalization of approx. 10.895 trillion, while BTC’s market capitalization is about $369 billion.

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